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Appeals court reinstates BP shareholders' lawsuit

•  Headline News     updated  2014/02/18 14:44

A federal appeals court on Thursday reinstated a shareholders lawsuit filed against BP Alaska in the wake of two oil spills in 2006 on the North Slope that exposed problems with the company's pipeline maintenance program.

A three-judge panel of the 9th U.S. Circuit Court of Appeals reversed the U.S. District Court of Western Washington on several claims.

Shareholders sued BP in 2008, claiming management made misleading statements about the conditions of the company's pipelines, and its maintenance and leak detection program after the first spill of 200,000 gallons onto the North Slope tundra two years earlier. The lawsuit claims BP made the statements knowingly or with deliberate recklessness.

The shareholders claim BP's share price fell 4 percent after the second spill five months later and the subsequent field shutdown for maintenance.

The Associated Press left messages seeking comment for attorneys on both sides of the case.

BP spokeswoman Dawn Patience said in an emailed statement that the company had not had an opportunity to study the decision, so "it would not be appropriate to comment."

BP Exploration Alaska Inc. was fined $20 million in 2007 after pleading guilty to a federal environmental crime for failing to prevent the crude spill, the largest ever at Prudhoe Bay.

The problems became known after the March 2006 spill prompted the FBI and the Environmental Protection Agency to open an investigation into maintenance practices at the 30-year-old field.

They found that thick sludge caked along the bottom of the leaky pipe was protecting colonies of bacteria that produce a corrosive acid. The acid had eaten an almond-sized hole in the steel over the course of several years, and that's where the spill occurred.

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